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Freeports – tax and customs reliefs

Rishi Sunak, during his Budget speech as Chancellor on 3 March 2021, announced the location of eight new freeports, including Plymouth and Solent, as part of the governments mission to ‘level up’ opportunities across the UK.

Whilst it was initially hoped that the freeports would be up and running by late 2021, our local freeports in Plymouth and Solent, as well as Teesside, only received final government approval and became fully operational last month. This was shortly followed by Government approval for the freeports located in Liverpool and East Anglia earlier this month.

Now that a number of the freeports are fully operational, it is worth revisiting the special tax and customs reliefs available:

Tax reliefs

There are a number of tax reliefs available to incentivise investment within the boundaries of a freeport tax site, the majority of which will be available until 30 September 2026:

  • Stamp duty land tax (SDLT) – SDLT relief is available for certain qualifying purchases of land and buildings within freeport tax sites
  • Structures and buildings allowances (SBAs) – enhanced SBAs are available for constructing or renovating structures and buildings for non-residential use within a freeport tax site. This measure gives relief at a rate of 10% compared to the standard rate of 3%
  • Capital allowances – 100% relief is available for companies investing in new qualifying plant and machinery for use in a freeport tax site
  • National Insurance Contributions (NICs) – secondary class 1 NIC relief is available to employers with business premises located in a freeport in respect of certain employees

Customs and tariffs

In a freeport customs site, businesses can also benefit from:

  • Duty suspension – duty payments are deferred for goods entering a freeport customs site until they enter into free circulation
  • Duty exemption – no duty is to be paid where products enter a freeport customs site and then are re-exported, never entering the UK domestic market
  • Duty inversion – manufacturers may decide to utilise duty inversion if the duty on a finished product is lower than that on its component parts, paying duty at the rate of the finished product when it enters the UK domestic market

How we can help

Here at PKF Francis Clark, we have a wide range of specialists able to assist businesses seeking tax and customs advice in respect of freeport investment. If you are interested to understand how we may be able to assist your business, please do get in touch.

FEATURING: Liam Dushynsky
Liam is an Indirect Tax Partner specialising in VAT, Customs Duty and other indirect tax matters. Liam joined PKF Francis Clark in 2005 as part… read more
FEATURING: Victoria Hutson
Victoria is based in the Plymouth office within the tax consultancy team. Victoria provides advice to individuals and owner-managed businesses in respect of a wide… read more
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